[Click eStock] "Kumho Construction, Housing Sector Growth Expected This Year"

SK Securities Report

[Asia Economy Reporter Minji Lee] On the 16th, SK Securities issued a buy rating and a target price of 11,400 KRW for Kumho Construction.

In the first quarter, sales reached 420 billion KRW and operating profit was 17.4 billion KRW, marking increases of 17.6% and 4.4% year-on-year, respectively. In the construction industry, the first quarter is typically a low season, and this quarter is expected to show a similar level to previous years.

Order volume is estimated to be around 430 billion KRW in the first quarter. The first quarter's pre-sale volume is expected to fall short of the originally planned 2,988 units, reaching only 1,689 units. This is due to the anticipated delays in projects such as Incheon Yongmaru self-development (520 units), Jeju Aewol (200 units), and Pocheon Gu-eup-ri (579 units).

The company's annual performance this year is expected to show a pattern of strong first half and weaker second half. Housing sales are estimated at approximately 973.5 billion KRW, which would represent a 49% growth compared to last year's 653.1 billion KRW. The company has maintained steady growth with 332.5 billion KRW in 2018 and 402.4 billion KRW in 2019.

Kumho Construction, which had previously used the name Kumho Industrial interchangeably, recently unified its trade name under Kumho Construction. Until now, Kumho Construction used the name Kumho Industrial for its listed company and Kumho Construction for the housing sales market. Shin Seo-jeong, a researcher at SK Securities, explained, “This can be interpreted as a declaration of intent to focus on the core construction business following the sale of Asiana Airlines,” adding, “Regarding dividends, considering the qualitative growth of profits and the demands of the largest shareholder Kumho Express (44.5%), dividends of over 500 KRW per share are expected.”